Danaher 2009 Annual Report Download - page 36

Table of Contents
2008 COMPARED TO 2007
Segment sales for Professional Instrumentation increased 37.5% for 2008 as compared to 2007. Sales growth was experienced in both of the segment’s strategic
lines of business during the year, with the majority of the growth coming from acquisitions. Price increases accounted for approximately 2.0% sales growth
which is reflected as a component of the sales from existing businesses.
Fourth quarter 2008 restructuring activities adversely impacted operating profit margins in the Professional Instrumentation segment by 60 basis points in
2008 as compared to 2007. In addition, the dilutive impact of recently acquired businesses reduced 2008 operating profit margins by 295 basis points,
including the adverse impact of acquired inventory and acquired deferred revenue fair value charges recorded related to the acquisition of Tektronix. The
Company also incurred Tektronix-related charges in 2007 associated with acquired in-process research and development that affected year-over-year operating
profit margin comparisons by 170 basis points.
Depreciation and amortization as a percentage of sales increased during 2008 as compared to 2007 primarily as a result of the increase in amortization expense
associated with the intangible assets acquired in connection with the Tektronix acquisition.
Overview of Businesses within Professional Instrumentation Segment
Environmental. Sales from the Company’s environmental businesses, representing approximately 51% of segment sales for 2008, increased 15.5% in 2008
compared to 2007. Sales from existing businesses accounted for 6.5% growth while acquisitions accounted for 7.5% growth and currency translation
accounted for 1.5% growth.
The segment’s water quality businesses experienced high-single digit revenue growth from existing businesses in 2008 as compared to 2007. This growth was
primarily a result of strong laboratory and process sales, reflecting in part the results of increased sales force investments and penetration into emerging
markets. Growth in sales was experienced in all major geographic regions with particular strength in Asia where sales increased at a double digit rate. Also
contributing to the year-over-year growth was increased demand by municipalities for the businesses’ ultraviolet disinfection water treatment product offerings
which experienced a mid-teens sales growth rate.
The retail petroleum equipment business experienced mid-single digit revenue growth from existing businesses in 2008 as compared to 2007. This growth was
primarily driven by strong sales of payment and point of sale retail and payment solution product offerings offset by a decline in dispensing equipment sales
primarily in North America and Europe. An increase in demand for the business’ vapor recovery products in North America also contributed to the year-over-
year sales growth, primarily related to an enhanced vapor recovery product that received regulatory approval and launched during the fourth quarter of 2008.
Test and Measurement. Sales from the Company’s test and measurement businesses, representing approximately 49% of segment sales for 2008, grew 70%
compared to 2007. Sales from existing businesses were essentially flat while acquisitions accounted for 68.0% growth and currency translation accounted for
approximately 2.0% growth.
Sales growth from existing businesses was driven primarily by performance during the first nine months of 2008 as a result of strong sales of the business’
thermography and precision measurement product offerings as well as strong growth from investments in emerging markets. While demand for the business’
thermography products continued to increase as compared to 2007 during the fourth quarter, demand slowed for the business’ traditional industrial digital
hand-held instruments and precision measurement products resulting in a mid-single digit rate sales decline in the quarter and offsetting the growth experienced
in the first nine months. In addition, the sales decline in the fourth quarter of 2008 is a result of reductions of inventory in the distribution channel as well as
the impact of currency exchange rate volatility on customer demand in certain emerging markets. Sales also declined throughout 2008 in the business’
enterprise network performance management line of business as a result of generally lower telecommunications demand and slower information technology
spending by customers.
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Source: DANAHER CORP /DE/, 10-K, February 24, 2010 Powered by Morningstar® Document Research℠
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